Member-only content. Please Login or get a free trial of Rick's Picks to view.
From the monthly archives:
June 2011
MarketWatch columnist Peter Atwater thinks the global financial system is in far worse shape now than in 2008, just before Lehman Brothers’ overnight demise nearly took the entire banking system with it. Click here for his lucid description of a global house of cards that is primed to topple.
Member-only content. Please Login or get a free trial of Rick's Picks to view.
Although Silver has been trending higher for more than a week, the slope of the rally has been unimpressive. Most immediately, a Hidden Pivot resistance at 37.060 is about as high a target as can be coaxed from the hourly chart (where p=36.160). The pattern is too sloppy to use for precise shorting, although the target itself should be good enough for government work, analytically speaking.
Corn has been in a bull market since last July, and although I’ve tracked it only on an occasional basis, I’ll be looking for low-risk opportunities to get aboard its next flight. For now, though, we’ll try to develop an analytical feel, first by watching to see how the September contract handles the midpoint pivot and ‘D’ resistance of the pattern shown. An easy move through both would give us reason to hunt more aggessively for entry spots just above these levels.
A 1652.00 target (see inset) 
beckons as a possible summer high, and it would become an odds-on bet following a two-day close above the 1558.10 midpoint. More immediately, a modest push to 1560.80 appears imminent. That’s the ‘D’ target derived from these coordinates on the hourly chart: A=1523.20 (June 17, 4 p.m. EDT); B=1548.20 (June 20, 10 a.m.); and C=1535.80 (June 20 11 a.m.). Expect it to show some stopping power, but if the futures close above it a 1578.60 target that also comes from the hourly chart would be in play.
The Indoos’ last big upthrust missed a 13017 target by 141 points (see inset), but the failure was understandable, given the imposing presence of May 2008’s structural resistance at 13137. The subsequent pullback has homed in on the 12286 midpoint pivot, and we shouldn’t be surprised if the Dow finds a groove oscillating around that number for the next few weeks. A weekly close above it would be reason to look for camouflage entry opportunities on the intraday charts.
From the Institutional Risk Analyst, and interesting note on systemic risk: ”The net increase in financial exposures due to the existence of the CDS market in sovereign credit risk has not made the real economy safer, but instead multiplies the dollar amount of the basis risk in all markets, real or imagined. You cannot get rid of systemic risk and “too big to fail” until you limit credit derivative products to holders of actual debt. Instead we have hedge funds and banks gambling on the end of the world.” For the rest of this analysis, click here.
By day’s end the futures had cruised past no fewer than three external peaks on the hourly chart, implying that bears are in for a rough patch. There are no particularly promising Hidden Pivots to reference at the moment as rally targets, but we should be attentive nonetheless to any opportunity that arises to short this hoax yet again with relatively little risk (much as we did from 1371.00, and again from 1358.25, two key highs since a presumptive bear market began in early May). If we work a “reverse” ABCD pattern along the lines shown, the minimum upside objective is 1334.50. This technique is used by some chartists and traders and works some of the time, but not nearly as consistently or reliably as the conventional method that we usually use.
Mortgage Crisis Descends into Blather Phase
by Rick Ackerman on June 22, 2011 12:01 am GMT · 25 comments
An article entitled Government Stays Glued to Mortgage Market topped an inside page of the Wall Street Journal’s yesterday, offering a mostly trenchant assessment of the real estate crisis but no easy alternatives. The 1,200-word think-piece, written by one Nick Timaraos, ponders the chicken-or-egg question of how to lure private capital back into mortgage lending. Should The Guvvamint pull back on support and hope investors fill the void? That’s the solution some policymakers are advocating, according to Timaraos, but we doubt they fully understand what it implies. They seem to think capital would return over time if Fannie and Freddie were made to compete for savings honestly with higher fees and no open-ended guarantees. And return investors would, although presumably not before housing prices collapsed a further 30%. Valuations would undoubtedly have stabilized by then, although we doubt that’s what policymakers have in mind when they talk about helping to promote price stability in the housing sector. » Read the full article